Sotheby's and Amazon.com Strike a Deal to Sell on Line

By CAROL VOGEL

Published: June 17, 1999

Five months after announcing a $25 million plan to begin its own on-line auction business, Sotheby's has entered into an alliance with Amazon.com to begin selling art and collectibles later this year.

The arrangement, announced yesterday, combines Amazon's on-line expertise and broad customer reach with Sotheby's reputation as an authority in the business of selling fine and decorative arts.

''We are bringing to the table technology, customer service and an introduction to 10 million people,'' said Jeffrey P. Bezos, the founder and chief executive of Amazon.com. ''One of the biggest problems in the on-line auction business is the ability to authenticate what we sell, and that's something Sotheby's can help us do. There's no other partner out there that could help us build this.''

Amazon is also hoping to tap into Sotheby's large international data base of collectors.

By working together, Sotheby's and Amazon are trying to strengthen their positions in the fast-growing and highly competitive field of on-line auctions. In January, Christie's, the Rockefeller Center auction house and Sotheby rival, announced that it, too, would start an on-line auction site, Christies.com. It will begin conducting on-line sales in September. Christie's, which is owned by Pinault-Printemps-Redoute of France, is said to be in negotiations with other on-line companies to form an alliance similar to that of Amazon-Sotheby's, but a spokeswoman at Christie's would say only that it was going ahead with its site as planned.

In April, the auction site Ebay bought Butterfield & Butterfield, the San Francisco-based auctioneers, for $260 million. Ebay is also said to have discussed some kind of partnership with both Sotheby's and Christie's, but people close to both auction houses said those talks had ended.

On a smaller scale, Artnet.com, a high-end portal devoted to selling artwork on line, went public in Germany last month. ''We see the Sotheby's-Amazon deal not as art world news but as an attempt by Amazon to compete with Ebay,'' said Hans Neuendorf, chairman of Artnet. ''For Sotheby's, it's a way to expand into low-priced collectibles.''

Mr. Bezos disagreed with those remarks. ''That's not true,'' he said. ''We're trying to create a whole new auction site, one that makes sense for valuable objects. The point is to break new ground selling fully authenticated, fully guaranteed objects on line using Sotheby's experts around the world and its network of more than 2,800 dealers.''

Under the agreement, Amazon will invest $35 million in the Manhattan auction house, or less than 2 percent of Sotheby's. It has agreed to buy one million shares of class A common stock at about $35 each and is buying a warrant for $10 million that entitles it to buy one million more shares of Sotheby's class A for $100 each. Shares of Sotheby's rose $4.125 yesterday, to $39.25, while Amazon.com rose $15.1875, to $111.6875.

Three different auction sites will be available by clicking on Amazon.com or Sothebys.com. Amazon will keep its three-month-old amazon.com/auctions, which sells everything from washing machines to Andy Warhol paintings to a $75,000 space capsule. Anyone can buy and sell on this site, but Amazon will guarantee purchases only up to $250.

A joint site, sothebys.amazon.com, will offer all areas of collectibles, from coins and jewelry to porcelains and Barbie dolls, but sellers will be only professional dealers and they will be responsible for guaranteeing the objects they sell. The third site, sothebys.com, will sell the more traditional auction-house fare, such as paintings, furniture and decorative objects. For this site, the seller, whether it is a dealer or Sotheby's, will guarantee all the property.

''We haven't thought of these different sites as having different price points but rather each having different and special characters,'' said Diana D. Brooks, Sotheby's chief executive. ''Now dealers from around the world will be able to offer their property to an unlimited number of potential bidders, and buyers will be able to participate in some of the most exciting on-line auctions.''

Participation will not simply be on line. In April, Amazon acquired Livebid.com, a provider of live auctions on the Internet. Mr. Bezos said it would begin broadcasting some of Sotheby's auctions. Bidders will be able to see the items on their computer screens, read the descriptions and bid while an auction takes place.